Determinants of AFDC Caseload Growth. F. SIMULATIONS


We use the regression estimates to simulate the estimated effects of all explanatory variables, and selected subsets of the explanatory variables, on historical growth in AFDC participation over various subperiods of our sample.

For each simulation, we first calculate the change in the log of participation from the first quarter in the period to the last that is explained by the changes in the relevant explanatory variables by state. This change is divided by the number of quarters in the period and multiplied by four to get an estimate of the average annual rate of change due to the set of explanatory variables in the state over the period. We report these results directly for selected states.

To obtain a national average rate of change due to the explanatory variables, we compute the weighted average of the state changes using weights that are proportional to average participation in each state over the entire period.